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SUMMARY:Contagion and Intervention in the 1772-3 Credit Crisis - Paul Kosm
 etatos\, Centre for Financial History and Darwin College
DTSTART:20140203T170000Z
DTEND:20140203T183000Z
UID:TALK50076@talks.cam.ac.uk
CONTACT:Dr Duncan Needham
DESCRIPTION:The 1772-3 credit crisis impressed its contemporaries both for
  its suddenness and for arising during a time of relative peace and robust
  economic growth. It furthermore displayed an impressive geographical rang
 e\, affecting a large portion of the eighteenth century financial network 
 including England\, Scotland\, the Netherlands\, and the West Indian and N
 orth American colonies. These characteristics make this crisis a particula
 rly attractive candidate for investigating the existence and mechanisms of
  financial contagion in this era\, a concept that is both overused and oft
 en nebulously defined in the literature. It has been furthermore claimed t
 hat the crisis displayed an early instance of a Lender of Last Resort (LOL
 R) in action\, some thirty years before the classical formulation of the c
 oncept by Henry Thornton\, and a full century before Walter Bagehot’s Lo
 mbard Street. This paper will employ contemporary manuscript evidence to i
 nvestigate whether financial contagion was really at work in 1772-3\, and 
 will describe its possible routes of transmission. It will furthermore ide
 ntify the agents and mechanisms of market intervention\, both for providin
 g liquidity to the market in the classic LOLR tradition of Thornton and Ba
 gehot\, and for organising outright bailouts of failing firms and individu
 als. It will finally discuss whether such intervention was done consciousl
 y and with the limitation of systemic risk in mind\, or whether it was mai
 nly influenced by political and other considerations.
LOCATION:Lucia Windsor Room\, Newnham College
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